Children Living in Poverty Are Facing a Perfect Storm

If the government is to have any hope of meeting its legal duty to eradicate child poverty by 2020, it must closely monitor how the benefits cap affects the wellbeing of the UK's poorest families.

This week marks an historic turning point in how benefits are increased. The government's up-rating measure comes into force, increasing payments by just one per cent and breaking the crucial link between benefits and inflation.

The effect of this will be to push another 200,000 children into poverty which is clearly unacceptable. But rather than taking action to prevent it, the government is allowing itself to be distracted by lazy stereotypes of welfare dependency.

It is shameful that some have chosen to use the monstrous example of Mick Philpott as justification for a whole-scale attack on the welfare system. To infer that his deeply troubling and criminal acts are in any way typical of those in receipt of benefits is hugely insulting to all the families who in difficult times find themselves with no option but to turn to the state for help.

What is more, the current rhetoric around benefits is creating a false dichotomy between 'strivers' and 'skivers' which ignores the fact that 60% of children living in poverty have a parent who is working. Instead what is needed is support to help families thrive, including for the most vulnerable families that Barnardo's works with, many of whom would like to take on more hours at work but struggle to meet the costs of childcare.

We are acutely concerned that increasing costs of living and childcare will combine to create a perfect storm leaving the most vulnerable families in poverty adrift with no means to build a life raft to rescue themselves. Let's look at the facts.

Barnardo's research shows how capping benefits up-rating will have an effect on the UK's poorest families. It found that low income families were disproportionately affected by inflation, as energy and food bills soared - gas by up to 10%. In fact, because these families spend more of their budgets covering the cost of essentials, inflation hit them a third harder than the UK's richest families last year.

However, for many of the UK's poorest families, childcare costs averaging £4.26 per hour are so high that it is impossible for them to afford to work their way out of poverty.

Currently, each nursery aged child gets 15 hours of free care and past this point, support worth 70% of the cost of childcare will be provided through Universal Credit. However, high childcare costs mean that a lone parent with two pre-school children, working at minimum wage, is unlikely to gain anything from working more hours.

Indeed, they are effectively priced-out of working as beyond 24 hrs (the point at which the government claims families can 'strive' their way out of poverty), this same family could effectively pay out 28p per hour to work under Universal Credit. In London, where childcare costs up to £5.16 per hour, this family faces paying £0.91 per hour for extra work.

Last month the government finally announced where it would allocate the extra funding for childcare. Eighty per cent of the £1billion extra funding, which came in the form of tax breaks, will go to those earning up to £150,000 a year.

But disappointingly, although 20% of the funding will go to families who claim Universal Credit, it will only be available to parents who earn enough to pay income tax. This is perverse, as it means that not a penny of the extra funding will go to the families who need it the most desperately - those who work part time for the lowest pay.

So if the government is to have any hope of meeting its legal duty to eradicate child poverty by 2020, it must closely monitor how the benefits cap affects the wellbeing of the UK's poorest families, and review the decision if inflation creeps above 2.5%. Beyond that, it must put basic measures in place to ensure that the families whose financial lifeline it is severing can work their way out of poverty - the poorest families must be eligible for the 85% subsidy of childcare that the government will now give to income tax payers on Universal Credit.

Urgent action is needed towards the practical steps which we have outlined and which will make a real difference to the lives and futures of the poorest children whose families will be most affected by welfare reforms. Now more than ever, those in positions of power have a responsibility to resist the temptation to indulge their worst political instincts when what they should be doing is focusing on how help can be targeted at those who need it most to get back on their feet.


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